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Rupee strengthens against US dollar in opening trade

LiveMint logoLiveMint 29-09-2017 Ravindra N. Sonavane

Mumbai: Indian rupee on Friday strengthened for the second session against the US dollar after the government stick to its borrowing plan and also increased foreign investment limits in debt.

The rupee opened at 65.39 a dollar. At 9.15am, the home currency was trading at 65.35 against the dollar, up 0.25% from its Thursday’s close of 65.51.

The government on Thursday said that it will borrow Rs2.08 trillion for fiscal year 2018 but dose not ruled out possibility of selling more government bonds for additional spending.

“(Governments borrowing plan) signals that the -3.2% of GDP fiscal target will be adhered to, for now”, said Radhika Rao, economist of DBS Bank in a note to its investors.

The Reserve Bank of India (RBI) also notified that limits for foreign portfolio investors (FPIs) for October-December increased by Rs8,000 crore for government securities and Rs6,200 crore in state development loans.

“These concurrent moves to stick with fiscal consolidation plans (for now) and higher portfolio investment limits will help stabilise markets and sentiments in the near-term. The overhang of slower FY18 growth, nonetheless, remains”, Rao added.

The 10-year bond yield was at 6.628%, compared to its previous close of 6.641%. Bond yields and prices move in opposite directions.

The BSE benchmark index rose 0.44%, or 138.21 points, to 31,420.69. So far this year, the Sensex has gained over 17.49%.

So far this year, the rupee has gained 3.9%, while foreign institutional investors have bought $6.05 billion and $20.25 billion in equity and debt, respectively.

Asian currencies were trading mixed. South Korean won was up 0.27%, Indonesian rupiah 0.19%, Philippines peso 0.17%, Malaysian ringgit 0.05%. However, Japanese yen was down 0.25%, China renminbi 0.24%, China offshore 0.23%, Singapore dollar 0.07%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 93.22, up 0.15% from its previous close of 93.085.

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